Bogus cell fees get closer scrutiny

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WASHINGTON — When a mysterious, unauthorized fee appears on your cellphone bill, it is called “cramming,” and consumer advocates and regulators worry it is emerging as a significant problem as people increasingly ditch their landlines for wireless phones.

The cramming fee is bogus and usually small, under $10 a month. It might be listed on your bill as a “premium service” or other generic-sounding charge. Cramming had long been a problem with traditional landline phones, but after pressure from lawmakers, regulators, and others, some of the largest landline carriers said last year that they would no longer allow third-party billing — where an outside company offers and then charges the landline customer for services like third-party e-mail, faxing, or voice mail.

“As people continue to use mobile phones as a payment option, this problem is likely to grow,” says Malini Mithal of the Federal Trade Commission. “It’s just a new opportunity for fraudsters.”

The commission held a daylong conference on the issue Wednesday with consumer advocates, wireless carrier representatives, and state and federal officials. The meeting came just weeks after the FTC lodged its first mobile cramming case, accusing a Georgia-based company, Wise Media, of bilking consumers out of millions of dollars for text messages with horoscopes, flirting tips, and other information.

The wireless industry says the Wise Media case is not the norm and mobile carriers are closely vetting third-party vendors who offer services for ringtones and other products and then have charges placed on consumers’ mobile bills.

“We have not seen a spike or trend in complaints to the agencies that reflects that this is a growing problem,” said Michael Altschul, senior vice president and counsel at CTIA-The Wireless Association, the main trade group for cellphone companies.

Kate Whelley McCabe, an assistant attorney general at the Vermont attorney general’s office, says cramming is often underreported.

She said many consumers do not know these charges are on their bills. More than 55 percent of respondents in a survey reported that they were not aware of any of the third-party charges until they were asked to review their bills.

Nearly 80 percent said they were not aware that companies other than their telephone company could bill them for products and services on their mobile phone bills.